Consideration

Question 1

What is consideration in a contract?

Answer 1

Consideration is the ‘thing’ each party puts into the contract.

Question 2

What does consideration involve?

Answer 2

It involves the benefit and detriment on both sides.

Example: Currie v Misa.

Question 3

What must consideration be?

Answer 3

It must be real.

Example: White v Bluett.

Question 4

What is the requirement for consideration’s sufficiency?

Answer 4

It must be sufficient but need not be adequate.

Example: Chappell v Nestle.

Question 5

What is SIDE RULE 1 regarding existing contractual duties?

Answer 5

If you only do what you were already bound to do, this is not good consideration.

Example: Stilk v Myrick.

Question 6

What is an exception to SIDE RULE 1?

Answer 6

If you do something extra, then this is good consideration.

Example: Hartley v Ponsonby.

Question 7

What is another exception to SIDE RULE 1?

Answer 7

If the other party gains an extra benefit, it is also valid.

Example: Williams v Roffey.

Question 8

What should you consider in addition to consideration?

Answer 8

Also consider whether there has been any economic duress.

Question 9

What is the rule regarding past consideration?

Answer 9

Past consideration is not good consideration – Re McArdle.

Question 10

What happens if consideration is already done before the agreement?

Answer 10

It is invalid.

Question 11

Is there any exception to the rule of past consideration?

Answer 11

Yes, if there is an implied promise to pay for a particular task before the consideration is done, then this is enforceable – Lampleigh v Braithwaite.

Question 12

What is the rule regarding part payment of a debt?

Answer 12

Part payment of a debt is not good consideration – Pinnel’s Case.

Question 13

What can you claim if you agree to only part payment of a debt?

Answer 13

You can still claim the rest.

Question 14

What are the exceptions to the rule of part payment of a debt?

Answer 14

1. Accepting something other than money for the debt.
2. Paying a smaller amount earlier than originally agreed.
3. Repaying part of the debt at a different place at the debtor’s request.
4. Promissory estoppel – if a promise is made and relied on, the promisor is estopped from going back on it.

Question 15

What is the rule regarding privity of contract?

Answer 15

Only those who give consideration have rights under the contract – Tweddle v Atkinson.

Question 16

What is the exception to the rule of privity of contract?

Answer 16

Under the Contracts (Rights of Third Parties) Act 1999, a non-party can enforce the contract if they are named in the contract or they gain a benefit from it.